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A firm has the following 3 ratios, compared to its industry peers: Firm Industry Profit Margin 10.5% Profit Margin 9.0% ROE 9.5% ROE 8.5% Debt
A firm has the following 3 ratios, compared to its industry peers: Firm Industry Profit Margin 10.5% Profit Margin 9.0% ROE 9.5% ROE 8.5% Debt to total Assets 65% Debt to total Assets 35% What is the likely cause of its profit margin out-performance vs. industry? The firm's equity financing is providing significantly high value to shareholders O The firm has likely reached the limits of its leverage The firm has a low corporate tax rate The firm is using a higher degree of financial leverage to produce higher profit
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